Who rules Eastern Europe Rules the World

 

Whoever rules  Eastern Europe will rule the Heartland, whoever rules the Heartland will rule the World Island, and whoever rules the World Island will rule the world! This theses became known, as the Heartland Theory, defined by Sir Halford John Mackinder, a famous English geographer, academic and politician. 

Heartland is a vast area of central Asia located between the Carpathians in the west, the Hindukush mountain range in the south and the Altai Mountains in the east. In the north it is surrounded by the Baltic Sea. Mackinder is considered one of the founders of geopolitics and geo-strategy, who wrote a paper in the 1904 entitled “The Geographical Pivot of History“, where he presented this theory and became famous for it.

Mackinder divided the world into three major geographical regions: The World Island, the Coastal Islands, and the Periphery Islands. The largest land mass in the world, which consists of Europe, Asia and Africa, he called the World Island. About 87% of the world’s population live in this area, which is at the same time the richest area with the world’s resources. The Coastal Islands are Japan and the British Isles, while the Peripheral Islands, according to his theory, are North and South America and Australia. Mackinder considered Eastern Europe as an extraordinary important region, which borders Heartland, therefore in his opinion, Eastern Europe has the best position to use Heartland’s resources. He felt that the countries belonging to the Coastal and Peripheral Islands were in a weaker position to take control of the Heartland. It is difficult to conduct a successful invasion to the Heartland, since it is protected by mountain ranges from the south and the sea from the north. He also called Heartland a “pivot zone”. According to him, Russia is the central state of the world due to its geographical position, since controls the “pivot zone” or the Heartland.

Mackinder’s theory is a combination of several factors that, by their dynamics, influence geopolitical movements, namely geographical position, political power and war strategy. If the forces of demography and economics are added, it is clear why the Heartland’s control is important. It is the reason why Mackinder assumed that control over Eastern Europe ensures control over the Heartland, control over the Heartland ensures control over the World Island, and control over the World Island creates the preconditions for the World control. 

Although theory has suffered many criticisms and even rejections, there are still strategists who question it and claim that the great geopolitical games are based on its matrix.

Contrary to Heartland theory is the Rimland theory, set up by Nicholas Spykman in 1942.Spykman was a professor of international relations at the Yale University who explained his theory during the World War II when he wrote the book “American Strategy in World Politics”. The Rimland theory holds that the main power belongs to the countries around the edge of Europe and Asia, thus controlling the Heartland. Spykman was an opponent of Heartland theory. During the World War II, strategists applied his theory with prevailing opinion that a combined naval and land force in the Rimland area could maintain control over the Soviet Union.

In the belt that encompasses Rimland, stretching from the far-East Asia, through Southeast Asia, India, the Middle East, then Southern and Western Europe, is passing the most of the world’s goods transit between the sea and the land. Professor Spykman considered that the control of coastal countries and the sea, gives an advantage over the control of the land itself. On the other hand, the critics’ argument was that Spykman did not take into account air control and nuclear warfare.

The concept of geopolitics (or geopolitik, as Germans called it) was proposed by Swedish political scientist Rudolf Kjellen in 1905. Its focus was political geography and combined Mackinder's heartland theory with Friedrich Ratzel's theory on the organic nature of the state. Geopolitical theory was used to justify a country's attempts to expand based on its own needs. 

Mackinder's theory also may have influenced Western powers' strategic thinking during the Cold War between the Soviet Union and the United States.

In some sense, a new Cold War is developing, with U.S and its allies trying to contain Russian expansion westward and a possible Chinese encroachment eastward (9-dash line). There is no moral right or wrong for the West, Russia or China. History is always written by victors (and the media). And containment or encirclement is not the answer in the 21st century!

Reference:

Mackinder: Who rules Eastern Europe rules the world, Adnan Kapo,  IGES, 8 February 2021

What is Mackinder’s heartland theory? Matt Rosenberg, 10 September 2018 (www.thoughtco.com)

Should Bankruptcy Threshold Be Reviewed?

The bankruptcy threshold is to be reviewed amid the high number of such cases, especially among youths, says the Prime Minister. The Government had raised the bankruptcy threshold at the start of the Covid-19 pandemic. The threshold was raised from RM50,000 to RM100,000. The increase was aimed at strengthening the economy while allowing individuals to better manage their finances during a period of uncertainty due to the pandemic.

According to the Insolvency Department, a staggering 18 people were declared bankrupt every day in the first five months of 2022. The department’s data also showed that between January and May, a total of 2,694 people were declared bankrupt, bringing the number of bankruptcies in the country to 274,628. (It was 287,411 in another press report.)

Source:https://www.nst.com.my

Nearly 60 per cent of the 46,132 Malaysians who declared bankruptcy from 2018 to May 2022 were aged between 25 and 44, according to the latest data from the Insolvency Department.

The official data also showed that nearly 42 per cent of those who declared bankruptcy in the last four-and-a-half years cited personal loans as a factor leading to bankruptcy, followed by nearly 15 per cent who listed vehicle purchase as a factor, and more than 13 per cent declaring bankruptcy because of a business loan.

Data from the Insolvency Department also showed a steady decrease in the number of bankrupts over the years. Those filing for bankruptcy totalled 16,482 in 2018; which fell to 12,051 in 2019; 8,351 in 2020; and 6,554 last year.

But the decrease could be attributed to the amendment in the Insolvency Act in 2020 which raised the bankruptcy threshold to RM100,000.

The highest number of bankruptcy declarations up to May 2022 comes from Selangor with 72,608 cases, followed by the three Federal Territories of Kuala Lumpur, Putrajaya and Labuan combined (46,876) and Johor (32,441).

If we increase it to RM150,000 and the situation does not improve, should we increase it to RM200,000? We need better solution than that! Moving the goal post is not a solution. More job opportunities, control of inflation and improving financial education are possibilities to reduce bankruptcies.

If moving the goal post is the answer, then we could change the CPI/food inflation index, GDP computation, NPL treatment and a whole host of other things so the results do look good. Isn’t that a false sense of confidence and an assault on integrity? 

 

References:

Review on bankruptcy threshold, Rahimy Rahim, The Star, 27 June 2022

Raising bankruptcy threshold is ‘data manipulation’, many still in financial straits, say financial experts, Aliza Shah, The Star, 15 July 2022

Insolvency Dept data shows 60pc bankrupts between age 25-44; personal loan is top reason, The Malay Mail, Zarrah Morden, 23 June 2022

Will Malaysia Face a Recession in 2023?

There is a “30% to 40%” chance for Malaysia to face a recession next year. That largely depends on whether the United States (Malaysia’s third-largest export destination) manages to avert an economic meltdown. There is a “very high possibility” for the United States to suffer a downturn in 2023, according to Socio-Economic Research Centre (SERC) executive director Lee Heng Guie. Lee said the main uncertainties about a US recession is its timing and severity.

Source: https://www.freemalaysiatoday.com (Rawpixel pic)

For the time being, however, SERC has maintained its 2023 economic growth forecast for Malaysia at 4.1%. It has also not factored in the risk of recession in its forecast. As for 2022, SERC predicted a growth of 5.2%. After a 5% expansion in the first quarter, Lee expects the Malaysian economy to grow further by 6% to 6.5% in the second quarter of 2022.

The stronger projected growth is on the back of the reopening of the economy and the Hari Raya festive celebration spending effect. In addition, a higher growth is also possible thanks to the Employees Provident Fund’s (EPF) fourth withdrawal amounting to at least RM40.1bil, of which 40% of the amount will be for the purpose of supplementing daily or monthly essential expenditure. However, the economic momentum is likely to decelerate in the second half of the year amid rising inflation, weakening global growth and synchronised global monetary tightening.

Lee said the country’s real gross domestic product (GDP) is likely to grow by 4.5% to 5% in the July-December 2022 period, as compared to 5% to 6.5% in the first half. He pointed out that Malaysia’s growth in the second half would also be restrained by cautious domestic demand, moderate exports and the dissipating consumer spending stimulus.

But not accounted for is the severe shortage of workers (1.2 million). Without them, manufacturing, construction and plantations are constrained. Essentially, that will impact GDP by a percentage at least. So that will taper overall growth to 3.5-4.5% for 2022.

On inflation, Lee opined that Malaysia’s headline inflation would increase by 3% to 3.5% in 2022, but highlighted that the country’s inflation remains contained compared to other neighbouring countries. But with imported inflation, food prices (inflation) will be double that.And this is despite of the various measures implemented by the government such as subsidies and price ceiling on cooking oil, fuel, chicken and eggs as well as electricity and gas.

Increasing prices of goods and services are expected to crimp the lower and middle-income households’ spending power, leaving them with reduced disposable income for spending. This is a tax on the poor. The rich are less impacted by inflation. In 2022, the subsidies of RM77.7bil or more will make up 31.2% of the total revenue and 4.6% of GDP. The share of subsidies to total revenue has been increasing from an average 14.3% per annum in 2012 to 2019 to 16.6% per annum in 2020 to 2022.

Hence, the need to rationalise subsidies, in a gradual and measured pace. For the B40 population, the Government needs to provide direct cash transfers to distressed households. It can be one-off or over a period. Then a number of tax-related incentives have to be reviewed to increase disposable income. The lower income group will be best to spend any additional relief which will benefit overall growth.

As I have said before, the Government has to review consumption patterns and improve domestic consumption; assist private sector investment whether DDI or FDI; look at high impact Government projects and finally enhance exports and services. If we could this without a political agenda, we will recover quickly even from a downturn.

Reference:

When the U.S. sneezes, Malaysia catches a cold, Ganeshwaran Kana, The Star, July 13, 2022

Can Malaysia Airlines Sell Its A380 Fleet?

Malaysia Airlines Bhd (MAB) has an internal timeline of hiving off either all or part of its six A380-800 super jumbos by the end of this year. The airline took delivery of its first A380 in May 2012 with the last delivered in March 2013. There were plans for the A380 to position Malaysia Airlines as a top-tier premium long-haul carrier. The airline scheduled the plane on regular runs to London, Sydney and Seoul. However, the A380 never lived up to expectations at Malaysia Airlines. The aircraft did decent business flying the seasonal Haj and Umrah charters flights to Jeddah and Medina under Project Amal. 

Malaysia Airlines currently operates a fleet of 74 aircraft, comprising six A350s, 21 A330-200s/300s and 47 737-800s. The airline is in the final stages of negotiation with several lessors for 21 A330 wide-bodies and aims for entry into service by the second quarter of 2024. The new planes would come on top of the 25 737 MAX jets it will take delivery from Boeing starting next year. 

Source: The Star

Deliveries of the 737 MAX planes were initially scheduled to commence in July last year, but Malaysia suspended the aircraft in March 2019 after the MAX planes were grounded worldwide following two deadly crashes.

The airline will lease the majority of the 21 A330s rather than buy them. MAB’s history for the last five years has been 100% leased. 

There is no update of its financial status – how much losses has been incurred in 2021 or first-half of 2022? What is the accumulated losses? RM28 billion? What is the turnaround plan? Why is the service level so poor? And will the Government produce a “white” paper or status of this airline and its future? None of these will happen, because the Government hardly believes in transparency and accountability. If you ask Najib, it is all PH’s fault. And if you ask PAS, this is something we have to accept because God wills it!

The pandemic has badly affected the aviation industry. Lufthansa and Air France never put their A380s back into service after they were grounded, deciding to retire their entire fleets instead, while Qatar sent half of its fleet to permanent storage. Meanwhile, Qantas, British Airways, Emirates, Qatar, Singapore, All Nippon and Korean Air have all announced that they are restarting A380 service.

The A380’s appeal to airlines has always been limited. It found no buyers in the US, Latin America or Africa, for instance. Should the current surge in travel demand fade and oil prices

stay elevated, British Airways may struggle to justify running partially full, four-engined 380s. The arrival of newer, fuel-efficient aircraft would once again pose an existential threat to the superjumbo.

Emirates, which operates more than 100 A380s, is retrofitting many of them with premium economy seats, a class that’s proving popular with leisure travellers with money to burn as the pandemic fades. Unwanted A380s will mostly avoid the scrap yard for now, with France’s Chateauroux airport, about 250 kilometres south of Paris, inaugurating a giant hanger designed to house the double-deckers at the start of next month.

In the end, it is management isn’t it? How do you deploy resources that best meet your markets, yield and cost? Can’t we try to use them (A380) or lease it to Emirates?

References:

Malaysia Airlines sticks to end-2022 timeline to sell its A380 fleet, Kang Siew Li, TheEdgeMarkets, June 23, 2022

Predictable: Malaysia Airlines Has Not Been Able To Sell Any Of Its Airbus A380s, Andrew Curran, Simple Flying, June 14, 2022

20 astonishing facts about the A380 superjumbo, Jacopo Prisco, CNN, December 18, 2021

Once-spurned superjumbos return to skies as travel roars back, Angus Whitley, Bloomberg, June 20, 2022

Pemimpin dan Pembodek (Leaders and Sycophants)

In many parts of the world, including Malaysia, we have the problem of pemimpin dan pembodek (“PdP”). Some of these pembodek are professionals who support a leader in office (or out of office) because of the handouts they receive - the “gravy” train.  It is something that even the Roman nobility were fond of- patricians and plebeians. It also transcends political parties. People in civil service, private sector or even religious institutions may testify of the PdP disease.

How do you get it? The disease is when a leader loves adulation and the so-called supporters sense that. For their loyalty and “love” they receive favours or preferential treatment. So many will angkat (praise) the leader with some tangible (or intangible) benefits to be received in due course. Of course, if the benefits stop (or are reduced) the bodek party may lose interest and look for a new leader who could do more.

Source: https://www.nbcnews.com

What is the life of a pembodek? He or she will meet with the leader frequently (or even daily) to “sing” praises of the leader’s achievements or statements made earlier (or the previous day). And also to report of any “threats” or negative responses made by other leaders/followers. Pembodek have to improve their standing and be at the “top of the heap” if they wish to receive the largesse from their leader. And that can only be done if they have “new” things to report or comment.

In some cases, before a leader, CEO. Head of Department has finished outlining a plan or project, the pembodek may utter setuju (agreed) to the dismay of others. Why do they do that? To ensure no negative comments, to give the leader greater semangat (confidence) or just to enhance their standing with the leader. The late Megat Junid faced this problem – before he could finish his suggestion, his supporter shouted setuju. So, he asked the supporter what motivates you to say “yes” when you have not heard the full text of my speech, “not necessary, boss. All your suggestions are always good” was the supporter’s response.

Leadership can easily get out of touch, if your source of information is from this pembodek group. A good leader will look for more independent views or turun padang (go to the ground) when no one expects it. Many (leaders) will say “no time lah”. That’s what happened to the Rajapaksas in Sri Lanka. It happened to our ex-PM in 2018. That’s what happened to many GLCs heads or private sector CEOs. When you are in a cocoon (or “tempurung”) you have no clue what the undercurrent is like. And by the time you know it, your life (or tenure) may be over.

How do we reduce the PdP disease? It starts with the leader – when you don’t entertain the pembodek and you look for several other sources, pembodek will invariably drop-off; when you don’t want fanfare for events or police outriders to travel, your pembodek may leave you; when you don’t subscribe to full page advertisements in newspapers (or other media) just to acknowledge or thank your presence for an event, the pembodek will be discouraged; when you stop your bounty to the pembodek, you have curtailed the disease.

Leadership requires humility – that is difficult. When a Roman general returns (to Rome) after a victorious battle (against the barbarians) he will be given a victory parade. But in his chariot will be an aide who will constantly whisper “you are a mortal not god” – to keep him firmly rooted on the transient nature of life.

Some of our leaders need honest aides, others need to “open” their eyes (and close their ears?); and still others have to fade away for they will never change – the PdP disease has become terminal for them!

Market Crash? Don’t Worry, Be Happy!

The stock market could very well crash in the coming months. This might sound like bad news if you have a lot of your hard-earned money invested. But a market crash isn't something to fear. In fact, there are three big reasons you shouldn't be concerned as long as you've got investments you believe in.

1. Inevitable

Worrying about a stock market crash is like worrying about a rainstorm. It's not worth it because a crash is as inevitable as a rainy day. Crashes have always been part of the natural economic cycle and if you are prepared, you can easily weather the storm.

Have an umbrella. In this case, your umbrella is a portfolio strong enough to make it through unscathed. 

2. Recoveries Follow Crashes

A market crash can send your investments plummeting, but just as there have always been crashes, recoveries have always inevitably followed like a rainbow after a storm.

The recovery may take months, or even years. But over time, the market has consistently gone up and never experienced a downturn that didn't eventually reverse itself. 

If you have investments you believe in, just hold them through the crash and wait for the price of your shares to bounce back. Any losses will be temporary and only on paper, and you should end up earning positive returns over the long haul if you've invested wisely.  

3. Buying Opportunities

Rather than worrying about market crash, you should view it as an opportunity. Contrary to what your instincts may tell you, it's a good idea to invest more when a crash has occurred. You can buy shares of good companies when they are on sale and benefit from the discount. 

If you want to make it through a crash unscathed, there are a few key things you need to do.

Source: https://www.business2community.com

First, don't invest in anything that you wouldn't be prepared to hold through a downturn. If you're trying to make a quick buck with a short-term investment and you don't trust that the company can survive tough economic times, you could suffer permanent losses if you have bad timing and buy before a crash occurs.

Second, aim to have some cash available to invest when a crash happens so you have the opportunity to take advantage of discounts in companies you believe in. 

And third, never panic-sell because doing so just locks in losses. Avoid checking your portfolio obsessively when times are tough and have enough confidence in your investment thesis to sit back and wait for the turnaround to come and your investments to rebound. 

If you do these things, a market crash shouldn't be cause for any concern. 

Reference:

3 reasons not to worry about a stock market crash, Christy Bieber, www.fool.com, 

May 2, 2022

The Sulu Sultanate Eggs Our Face?

Two of Petronas’ subsidiaries in Azerbaijan were reported to have been seized by court bailiffs after an arbitration court in France ruled in March last year that Malaysia has to pay a USD15 billion or RM62.59 bil in compensation to descendants of the Sulu Sultanate. The holding companies seized are estimated to be worth more than RM8.87 bil.  However, Petronas contests that is not true – it has divested its entire assets in Azerbaijan and repatriated the proceeds from the exercise.

In March 2021, Spanish arbitrator, Gonzalo Stampa, had instructed the Malaysian Government to pay at least US$14.92 bil (RM62.59 bil) to the descendants of the last Sulu sultan.  The ruling was made following a violation of the 1878 agreement signed by Sultan Jamal Al Alam, Baron de Overbeck and the British North Borneo Company’s Alfred Dent.  Malaysia stopped paying Sultan Sulu’s heirs their annual RM5,300 cession money since 2013 as a result of the Lahad Datu armed incursion.  And by stopping the payment since 2013, Malaysia had breached the agreement. 

Source: https://www.therakyatpost.com

The claims of the heirs of the Sulu Sultanate to Sabah or compensation in lieu of repossession lacks credibility in international law or even on the basis of the agreement signed between Sultan Mohamet Jamal Al Alam with Baron von Overbeck and Alfred Dent on Jan 22, 1878.

Whatever payment made to the heirs is ex-gratia (something done out of favour, voluntarily). It follows, therefore, that an ex-gratia payment can be withheld or withdrawn permanently/indefinitely should the payer (the Malaysian government) decide to do so — as it did in 2013 following the Lahad Datu incursion.

But in any event, this whole episode is an embarrassment to the Malaysian Government. For us to pretend it is of no consequence has ended up with egg on our face. Couldn’t the AGC or some legal authority countered this action well before the latest seizure of Petronas’ assets? Are we asleep as others work themselves to be billionaires at our expense?

References:

Report: Two of Petronas’ subsidiaries in Azerbaijan seized by Sulu Sultanate’s heirs, G. Vinod, Focus Malaysia

Sulu Sultanate had forever forfeited claim over Sabah, Jason Loh Seong Wei, New Straits Times, 16 March 2022

GDP Growth: Mother of Miracles?

Economists are cautious about the outlook of the economy in the second half of 2022. Challenges such as the Russia-Ukraine war, higher inflation, supply chain disruptions and the very weak ringgit are factors affecting their thinking.

Malaysia’s gross domestic product (GDP) growth rate for 2022 is likely to be 3.5% in a baseline scenario. The slowdown of China during the second quarter of the year already had a significant impact on exports. Others suggest an upside scenario where GDP is expected to grow 5% this year, as forecast by the government and Bank Negara. This is based on the assumption that everything will go smoothly and converge to a pre-pandemic scenario. No one accounts for lack of labour (1.2 million) in manufacturing, plantation and construction sectors. They look to the mother of miracles – growth without labour!

Source: https://clicknepal.com

In a baseline scenario, there could be “some persisting international factors” that would result in a downward revision of growth in many parts of the world. And, in a downside scenario, there could be some “black swan” event affecting the international economy. The negative events can be many – geopolitical, with an extension of the war, financial, with a stock market or a dollar crash, political turmoil especially in the United States before the mid-term elections or economic, with a full-blown recession in some European countries.

In the baseline scenario, GDP is forecast to grow 3-3.5% and 4-4.5% in 2022 and 2023, respectively. In the poor scenario, the Malaysian economy is sliding into a technical recession (in the second and third quarters) and growth close to nil for the whole year. 

Malaysia’s economy grew by 5% in the first quarter of 2022, supported by increases in both domestic and external demand as well as labour market recovery. During the quarter, monthly GDP grew by 4.3% in January, 5.2% in February and 5.4% in March.

The labour market showed the unemployment rate at 4.1%, a 0.2-percentage-point improvement compared with the previous quarter, attributed to the implementation of a wage subsidy programmes worth more than RM20bil and successful job creation initiatives such as JanaKerja and JaminKerja.

The central bank expects GDP growth for 2022 at between 5.3% and 6.3% (2021: 3.1%). Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz said the country’s economy is expected to continue to strengthen in the second quarter of this year, following the encouraging GDP growth of 5% in the first quarter, including the continued improvement in wholesale and retail trade. He pointed out that the economy was gradually improving and had started to expand based on various indicators for May 2022.

To accelerate the recovery momentum, Tengku Zafrul said the Finance Ministry had kick-started engagement sessions in an effort to establish measures that took into account the needs of various stakeholders. Budget 2023 will emphasise structural reforms and boosting economic resilience. With its theme of ‘Strengthening Recovery, Facilitating Reforms Towards Sustainability of Economic Resilience and Well-Being of Keluarga Malaysia’, the government will continue to focus on the well-being of the people, businesses and economy.

Economic growth in the first quarter was primarily driven by private consumption and government spending. Investments have remained stagnant and this is the concerning part of the growth recorded so far.

Here lies the key to better outcomes. Improve investment environment including labour shortages, support domestic consumption, enhance government spending and drive exports then you will have your GDP forecast of 5% or more. But what specific steps are required? Not silly arguments on language but solid ones on what SMEs require for re-investment and digitalisation. Assist banks to direct lending, encourage lower income group to spend with cash transfers and work with exporters/traders on markets and logistics. If MITI, MIDA, Home Ministry, Human Resources and MoF can get their act together, we have a base for a good GDP growth. If not, we will plod along and blame everyone (esp. the Indonesians) but ourselves.

Reference:

External factors to play big role in GDP growth, Eugene Mahalingam, The Star, 11 July 2022

Over 71 Million Plunge Into Poverty!

A spike in inflation rates pushed 71 million people into poverty in developing nations since March 2022, according to a recent UN Development Programme report. The report revealed that interest rates are likely to rise following soaring inflation, resulting in further recession-induced poverty to exacerbate the crisis. 

With depleted fiscal reserves, high levels of sovereign debt, and rising interest rates on global financial markets, developing countries face challenges that require urgent international attention. 

Source: https://www.undp.org/

According to UNDP estimates, an analysis of 159 developing countries globally further had indicated that price spikes in key commodities are already having immediate and devastating impacts on the poorest households, with clear hotspots in the Balkans, countries in the Caspian Sea region and Sub-Saharan Africa (in particular the Sahel region).  While most developing countries are grappling with shrinking fiscal space and ballooning debt, the challenge is how to provide meaningful short-term relief for poor and vulnerable households. 

It was also revealed that a number of countries have tried to mitigate the worst effects of the current crisis by implementing trade restrictions, tax rebates, blanket energy subsidies, and targeted cash transfers. A targeted cash transfer is more equitable and cost-effective than a blanket subsidy, said the report. 

More than half of the benefits of a universal energy subsidy go to the richest 20% of the population, according to the report. By contrast, cash transfers mostly go to the poorest 40% of the population. 

And Sri Lanka is not the only country that is a basket case. According to the World Bank as many as 12 other countries are at risk of an economic crisis. Pakistan, Tunisia, Egypt, Turkey are all candidates for IMF bail-outs. El Salvador and Argentina make-up the top 6. The problem with each is the lack of fiscal discipline, low revenue base and high debt to GDP. In every instance the poor will suffer more than the rich or the elites, when they were hardly responsible or benefited from the profligacy of their political masters. Could we learn from lessons of others?

Reference:

UNDP: Cost-of-living crisis plunge 71 million people into poverty, Focus Malaysia, 8 July 2022

Is Quality Education Our Biggest Issue?

Quality education is malaysia’s biggest issue, according to Tan Sri Mohd Sheriff Kassim, a co-founder of G-25, the group of 25 ex-senior civil servants.  There was no issue with “quantity education” as Malaysia already had a favourable teacher to pupil ratio.

Quality needs improvement according to Tan Sri Sheriff. The weakness is also in school discipline. In remote areas, teacher absenteeism is rampant. Some teachers bring their agenda on race and religion into the classroom.

Tan Sri Sheriff also said parents wanted more teaching hours in primary schools for English, Mathematics and Science, just like in Chinese schools, so their children are better qualified for the job market. There are also complaints that the primary school curriculum spends too much time on religion for Malay students. During religious classes, the Malays and non-Malays have to be physically separated.

Source: themalaymailonline.com

Some parents sacrifice everything by sending them to private schools. Alternatively, if they can’t afford it, they send their children to Chinese vernacular schools instead according to Tan Sri Sheriff. He urged the government to reform national schools to make them the first choice for parents, like in the 60s and 70s.

He said Malaysia has all the physical facilities and teachers but what is lacking is the political courage to empower the local district education office and headmasters to carry out the Education Ministry’s policy of making schools truly multicultural to attract all races to study under one roof.

A recent report in theSun quoted some stakeholders as saying that despite numerous revamps and policy changes, the education system may be heading for failure. Parent Action Group for Education (PAGE) president Datin Azmah Abdul Rahim said it was frustrating to see the top administration responsible for the nation’s education system not realising their shortcomings.

A former secondary school teacher said changes in the education system were mainly in the syllabus but teachers were not given the right tools to educate students.

Tool is one thing. Then you have the constant bickering about English and Bahasa Malaysia. Indonesia has progressed significantly in English – just listen to their key ministers speak in English confidently in foreign forums. We have regressed and are happy to be the proverbial “katak bawah tempurung”.

The MoE will speak about the straight A students for SPM- over 10,000! Ask them to sit for “O” levels or its equivalent, then you know how they are doing. Many who go overseas realise the wide gap they face. It’s not just content but language.

When we invest in religious studies are we planning for more religious teachers? Perhaps, the Saudi government which is reforming could advise on the failures of their previous policy. Call MBS and see what he thinks of the new Saudi Arabia.

I have said this and will say it again, we need 2-3 languages, we need maths and science and we need a worldview of history – unless we believe in living under the “tempurung” forever!

Reference:

Quality education our biggest issue, says Sheriff, Azman Ujang, https://newswav.com, 

13 July 2022

Comedy Commission: Regulator of All Comedies?

Lately, the situation has got serious on comedy! And this is no laughing matter! A comedy club had the audacity to allow for a lady to “redress” in front of an audience. 

Many states and religious leaders will find this offensive. These things happen because we don’t have a “Comedy Act” (of Parliament) and are not governed by a “Comedy Commission”. A Comedy Commission will outline what are permissible comedies and what are not. Then if we have a regulator, enforcement is assured. All comedians will have to be certified by the Commission. In fact, they have to pass two papers in an exam for certification. And as part of the continuing education, they will attend two courses on comedy each year, and earn the minimum 20 points. The program for all aspirants is to follow the module “Jangan Ketawa”.

Source: https://iulianionescu.com

In fact, some universities could offer a degree in comedy – a first in the world! The other is all comedies must be in BM (not English), otherwise people may not understand the punch-line. 

This whole area of comedy is a growth sector in Malaysia with clubs in every city, providing employment and a new joy in one’s heart.

Deviant comedians are reprimanded, fined or jailed for bringing disrepute to the noble, laughing profession. Club owners are licensed for their ability to crack jokes. And this is not a joking matter. Private jokes and comedies are not allowed. Otherwise, a society will become too comical. We are a serious society who can only cater to sanitised, fully vaccinated jokes. Pranks and spontaneous jokes are to be curtailed. And we have a secret service which will monitor all private jokes including those in social media or blogs. So, I must be careful in what I write – hope you take my thoughts deadly serious?

Leadership That Inspires!

It is reported that more than one million Malaysians work in Singapore. Malaysians overall, constitute the largest foreign community in that country. The latest statistics indicate that 44% of Singapore’s foreign-born population are Malaysians. And to add to this, an estimated 350,000 Malaysians make across the causeway daily for work and school.

If there was an abundance of opportunities in Malaysia that pay well; if our ringgit is strong and formidable; if our education system is comparable to the best in the world; if we live in an inclusive society; if privileges are offered to those in need, Malaysians will not even think about going to work, study, and live in Singapore or anywhere else.

Source: The Star, 18 Mar 2020

Indonesia and Singapore, seem to have better leadership. They are making amazing strides offering vision and foresight to their people, while we are plodding along. Many politicians are also playing musical chairs!

Our choices are so limited to a motley crew of self-serving career politicians. We just see our leaders making numerous silly statements and not doing much to ensure prosperity and inclusiveness. Malaysia has slipped seven notches to 32nd place in the 2022 International Institute for Management Development (IMD) World Competitiveness Ranking. So, as things get worse for normal folks, our politicians ask us to make sacrifices for the well-being of the nation, but they continue to lead the high-life with outriders for criminals as well. We need leaders who will navigate us out of the complex issues Malaysia faces.

When you have your back against the wall and your family is struggling to make ends meet or when your business is teetering on the brink of collapse and your job is on the line, you need beacons of hope. Great leaders are like lighthouses who help us circumnavigate through treacherous waters. But in Malaysia, the lack of integrity in our leaders is stupefying.

Over the decades, Malaysians have been fed a steady diet of corrosive views. Systematically over time, we have been indoctrinated to take on the warped views of some politicians.

Our transportation situation needs immediate attention. Malaysians can see the worsening traffic woes. If it normally took 20-minutes to get to work, now it takes an hour because of the congestion. But when a discussion started about whether we should have more highways or focus on public transport, the transport minister said that the planning of highways is not within his ambit. Of course, it is the job of the works ministry. But don’t they talk to each other and figure out a plan together for the benefit of the citizens?

Most Malaysians don’t know whether to laugh or cry as things continue to slide.

So once again, the question is, what kind of leaders do we want? Opportunistic self-servers, or those who work for the betterment of everyone? If we think about the people we truly admire, you will see that they will have traits like integrity, trustworthiness, fairness, honesty, positivity, a winning attitude, and are able to cope with setbacks. A management expert once wrote that leadership has less to do with position than it does with disposition. 

For Malaysia, we need leadership that combines strategy and strength of character. Our leaders cannot demand reverence or allegiance. They have to earn it through a proven track record. Exceptional leaders have integrity, and put their people front and centre.

When Malaysia finally has these types of leaders, Talent Corp. will become irrelevant and more are willing to sacrifice for a better Malaysia. And if you need to emulate any leader, then think of Jokowi, you can’t go wrong.

Reference:

Will you leave Malaysia if everything is good here? Shankar R. Santhiram, FMT (Free Malaysia Today), 16 June 2022

Budget 2023: What Should the Government Do?

AFTER three consecutive years of expansionary budgets (2020-2022) and eight economic and financial packages to help lift the economy, the government is scheduled to table Budget 2023 in Parliament on Oct 28.

The 2023 budget marks the last budget for a five-year administration term, which will automatically be dissolved in July 2023 if not earlier. (The 14th general election was held on May 9, 2018).

The government has rolled out eight stimulus packages (RM530bil or 35.8% of the average gross domestic product or GDP in 2020-2021) and three years of big fiscal spending (2020-2022 forecast) totalling RM979.6bil.

The 2020-2021 budget had already spent RM647.5bil or an average of 21.9% of GDP, and it has budgeted another record total spending of RM332.1bil or 21% of GDP in Budget 2022.

From January till April 2022, it has utilised 35.2% or RM116.9bil of the total allocation.

Budget deficits for 2020 till forecast 2022 average RM94.6bil per year compared to an average deficit of RM42.3bil per year in 2008-2019.

Will the government backtrack its fiscal reduction path as guided under the Mid-Term Fiscal Framework, and go for another record year of fiscal spending? Does the government have the capacity to borrow?

As at end-March 2022, the federal government debt stood at RM1.006 trillion or 61.4% of GDP, while statutory debt was at RM949bil or 57.9% of GDP, which was below the statutory limit of 65% of GDP.

Meanwhile, Malaysia has dropped to 32nd spot (from 25th) in 2022 IMD rankings on competitiveness of countries. Is it the lack of governance, competence, certainty, consistency and clarity? We are in confusion and chaos right now.

Then you have soaring prices – a lunch that used to cost RM12-15 has gone up by 20-30% before 1st July; higher cost of living; rising corruption – we have dropped to 62 (by 5 spots) according to TI-M global rankings; the weakening ringgit – because BNM believes in growth when there is none! Stabilise the currency first by hiking the OPR by 1%, will you? 

Malaysia’s shadow economy is 21% of GDP or RM300 billion in 2019. This is revenue loss to the Government. Why is there a shadow economy? Because when we ban something it goes “underground”. So the idea of banning alcohol, gaming, pubs etc. will not solve the problem but drive them underground!

What should we do? 

Mr PM and his FM have great people around as advisers but nothing seems to work! Could we just focus on short-term rather the usual noise about structural issues? 

• Strengthen revenue base by widening and increasing the tax for high net worth individuals and corporates with high income/profit:

            o Introduce windfall tax for sectors beyond palm oil?

            o Introduce new taxes on forex, inheritance

• Control expenditure with new mechanisms, otherwise “leakages” happen.

o Prioritise projects and big-ticket items or defer wasteful ones – good to have but not necessary for now

• Build strategic food stockpile – no need for a “chicken” Board or any other animal Board

• Examine exports and increase or diversify items including services

• “Wean-off” subsidies over time, so that it is not inflationary for the common man

If you can do all the above, then look at structural reforms to improve competitiveness. Can we do that?

Reference:

Insight- Can the government afford another ‘wow’ budget? Lee Heng Guie, The Star, 23 June 2022

Singapore: World’s Biggest Automated Port by 2040!

As the world’s economies struggle to untangle unprecedented congestion in global supply chains, one of the world’s busiest ports is backing an ambitious modernization plan to provide solutions.

Singapore is forging ahead with a S$20 billion (US$14 billion) project to build the world’s biggest automated port by 2040. This will double the existing space and feature drones and driverless vehicles. The city state started operations at two new berths last year, and construction work is continuing on the next phase.

It’s becoming more urgent for ports to add capacity and speed as the pandemic has changed the nature of global supply chains. The just-in-time system for shipping has been in disrepair as exporters in Asia face obstacles getting goods transported to customers in the US and Europe. The situation has worsened in 2022 with Covid lockdowns in China and the war in Ukraine. 

Ports are the most visible choke points in the US$22 trillion arena for merchant trade, and a long-overdue transformation will require tackling a host of problems. Terminals are constrained by fading technology and limited space. Further, inefficiencies are compounded by containers piling up at yards and a short supply of workers and trucks. 

Space presents a significant limitation for ports handling tens of thousands of containers a day, especially when trucking and shipping schedules are disrupted. The need for more room became clear during the pandemic, as docks overflowed with containers, and some ports had to place boxes along roadsides to await transport. 

Singapore, a densely populated island, would seem a difficult place for expansion. But the city state, facing rising competition from rivals such as Shanghai, began allocating funds in 2013 to reclaim land needed to build a new port, Tuas, on the country’s west coast. The port eventually will double its capacity to 65 million twenty-foot equivalent units (TEU) by 2040. 

The plan, set in place long before the onset of supply-chain upheaval, now appears prescient. The expansion has provided much-needed space to run operations efficiently and carry the city beyond the current pandemic.

 Shipping consultancy Drewry expects about 30 million TEU of capacity will be added per year from 2021-2026, down 25% from 40 million TEU added each year during the decade to 2020.

Once Tuas is completed, Singapore will shut all its existing capacity and relocate everything to the larger space there. The three city terminals at Tanjong Pagar, Keppel and Brani will all shut and move to Tuas by 2027, while Pasir Panjang terminal will be consolidated by 2040.

That will help consolidate operations into a more logical structure, allowing for faster handling of containers, which reached a record 37.5 million in 2021. The new arrangement will reduce the need for trucks to traverse downtown traffic, while transporting cargo from one terminal to another. 

Shortening the lines of trucks waiting at terminals is crucial for all ports. That’s a major reason for bottlenecks, holding up the movement of goods during Covid lockdowns in Shanghai and causing significant delays in clearing boxes at California ports. The risks tied to trucking were also highlighted earlier this month when striking drivers in South Korea wreaked havoc on supply chains. 

Investment in ports isn’t just about building more roads and trucks. It’s also about improving the port’s ability to track and coordinate what’s happening at sea with all the moving parts needed to transport containers on land.

Singapore will operate automated guided vehicles to move more containers between the yards and berths where ships wait. A human driving a truck will use sensors and wireless communications to lead a convoy of driver-less vehicles in and out of the port. Drones will be used for shore-to-ship deliveries, and aid security guards with checks.

The upgraded technology will save on manpower in the global labour crunch. But the Singapore port wants to take a further step by integrating information systems, enabling it to track cargo and communicate surges in demand to all supply-chain players. 

Singapore is among a growing trend of seaports cutting down on paperwork processes. It is one of seven jurisdictions globally that accepts electronic bills of lading, a key supply-chain document that must be submitted or collected from ship captains before cargoes can offload from vessels.

The shift is a major leap from the decades-old practice of submitting physical papers to verify cargoes. The process became a major headache during Shanghai’s lockdown, as there were fewer people at the ports for delivering documents, bringing a halt to activity.

The only possible downside to all this is the Chinese and Thais move forward with an Isthmus of Kra canal. This may take some time or may never happen. Either way, Singapore is well aware of how to adjust accordingly.

Meanwhile, Malaysia will remain a secondary player with the main west coast ports Tanjung Pelepas (11.2m TEUs in 2021) and Port Klang (14m TEUs in 2021) together handling less than 63% of Singapore. Both are unlikely to challenge Singapore’s pre-eminent status for now and the foreseeable future.

Reference:

Singapore’s US$14 bil mega-port takes aim at shipping chaos, Ann Koh & Kyunghee Park, Bloomberg, TheEdgeMarkets, 29 June 2022

Selamat Hari Raya Haji

 

What is MRT Corp’s Business Model

Mass Rapid Transit Corporation Sdn Bhd (MRT Corp) Annual Report 2021 shows that its RM56.66 bil accumulated losses supersedes that of the 1Malaysia Development Bhd (1MDB) and Malaysia Airlines.

MRT Corp which prides itself as a developer of Malaysia’s urban rail transport infrastructure incurred loss after tax of RM3.67 bil for its FY2021 ended Dec 31, 2021 (FY2020: RM8.94 bil; FY2019: RM7.3 bil).

Interestingly, the Finance Ministry (MOF)-owned entity behaves like many other government-linked companies (GLCs) in that despite being in the red since FY2016, its financial state does not seem to affect the remuneration of its top brass.

Its key management personnel compensation rose 31% (or RM610,000) to RM2.57 mil from RM1.96 mil previously. The fees and other remuneration for its directors climbed to RM469,000 (FY2020: RM354,000) while that of other key management personnel – namely, group CEO, group chief commercial officer and group chief financial officer – jumped to RM2.57 mil (FY2020: RM1.96 mil).

The first line to be implemented by MRT Corp was the 46km Kajang Line (previously known as Sungai Buloh-Kajang Line) which runs through the city centre of Kuala Lumpur to Kajang. The line was fully operational in July 2017. (Currently, the line may not meet operational costs)

Prime Minister Datuk Seri Ismail Sabri Yaakob launched Phase One of the 57.7km Putrajaya Line (previously known as the Sungai Buloh-Serdang-Putrajaya Line or MRT2) which runs from Kwasa Damansara to Kampung Batu while Phase Two which will cover the remaining line is expected to be operational in January 2023. (Our former PM Najib Razak was guest of honour before the PM launched the line).

On March 7, MRT Corp chairman and director Datuk Wira Azhar Abdul Hamid was reported to have resigned as chairman and director after having “a difference of opinion” on the implementation of the MRT3 Circle Line project. This line will cost approximately RM1 billion per kilometre or RM50 billion under current estimates.

MRT Corp is not a profitable entity and will never be (if it follows its current mode). Its business model is to be a government “parasite” – not self-sustaining and surviving because of Government grants, loans or subsidies. Urban rail is not a profitable venture unless you have cross-subsidy from other sources like property development. This is the Hong Kong (MTR) model. We could copy them and make the burdensome, government guaranteed loan partially reduced. But MRT Corp has not indicated its plans for property development or how it will sustain itself. Operationally it is difficult to meet both operational costs and debt repayment. To have a fare-box ratio of over 1.0 will be ideal. But nothing of that sort is mentioned by the CEO except to explain Najib’s tweet was the reason for his exclusive trip on the MRT 2!

We need transparency on its operations, a plan towards being self-sustaining and an accounting of all grants, loans and subsidies. Is this not the Rakyat’s money or is Najib paying for it?

Reference:

Is MRT Corp’s ballooning accumulated losses part of its investment strategy? Cheah Chor Sooi, Focus Malaysia, 21 June 2022

Turkey’s Hyper Inflation: A Case for Us?

Turkey’s official inflation rate spiralled to nearly 70 percent in April (hyperinflation is 50% increase in prices per month) - unconventional economic policies are reasons for the economic turmoil. The consumer price index rose by 69.97 percent year-on-year in April compared with 61.14 percent in March, the national statistics agency said on Thursday.

Erdogan insists that sharp cuts in interest rates are needed to bring down soaring consumer prices, flying in the face of economic orthodoxy. The collapse of the lira has pushed up the cost of energy imports and foreign investors are now turning away from the once-promising emerging market.

Source: https://www.dailysabah.com

Russia’s invasion of Ukraine and the coronavirus pandemic have exacerbated the energy price spikes and production bottlenecks. Analysts say Turkey’s annual inflation rate, the highest since Erdogan’s ruling AK Party stormed to power in 2002, is largely linked to his unconventional economic thinking. Erdogan has put pressure on the nominally independent central bank to start slashing interest rates. In April, the bank kept its benchmark interest rate steady for the fourth consecutive month, bowing to pressure despite high inflation.

The biggest price increases in April were in the transport sector, standing at 105.9 percent, while the prices of food and non-alcoholic drinks jumped 89.1 percent.

The Turkish currency has lost 44 percent of its value against the dollar last year and more than 11 percent since the start of January.

Erdogan’s government has responded by using state banks to buy up liras in a bid to cut the currency’s losses. There is also speculation that the central bank sells dollars (USD2.5-3 bil) through back channels to stem the lira’s slide.

Erdogan, who faces a crucial presidential vote next year, has also shifted policy to mend broken alliances with cash-rich Gulf states to draw financial support.

What can we learn?

To stem inflation, orthodox, boring economics is the only way – and by the way, raising interest rates is not un-Islamic! How can one say interest rate is riba and yet have a modern economy operating in a hyper-inflationary environment? If you are so inclined to be on a Islamic footing, please remove all vestiges of “western” economic thinking and use terminology that befits Islamic thought. This dual economy running parallel of each other – with hyperinflation in its midst is actually un-Islamic from my point of view. Have one or the other! Erdogan wants both and makes a mess of both.

The other is not to have politicians or religious mullahs pronouncing economic diktats – no sane central banker or economist can survive.

A once thriving, modern economy is now becoming the “sick” man of Europe – a label it had before WW1. May we learn to distance ourselves from narrow, blinkered views!

Reference:

Turkey’s inflation rate soars to almost 70 percent, Aljazeera News, 5 May 2022

Jihad on Inflation?

Can the public recalibrate their spending and consumption as Malaysia reported its highest food inflation in over a decade in May, with economists projecting further increase in food bills?

In May, Malaysia recorded a 2.8% year-on-year (y-o-y) increase in the consumer price index (CPI), which measures inflation. The rise was on the back of food inflation which rose to a new high of 5.2%, the highest since November 2011.

Within the sub-group of food, price increases exceeding 5% were for vegetables (8.1%), milk, cheese and eggs (8.0%), chicken (13.4%) and meat (9.5%).

Meanwhile, Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz had said the consumption subsidy expenditure of RM77.3bil so far for 2022 is the highest subsidy in Malaysia’s history. The projected consumption subsidies cover petrol, diesel, liquefied petroleum gas (RM37.3bil), cooking oil (RM4bil), flour and electricity to reduce the people’s cost of living, and subsidy bills (RM9.7bil), excluding welfare aid from 2018 to 2022.

Although many have suggested the subsidies remain in the short-term but consumers need to re-balance their personal expenditure. Cooking at home and making diet changes may help. But what if you are already on rice and sardines, what more adjustment could you do unless you skip a meal? Others have suggested that a poor person takes on an additional job, and what if you are already on two jobs – cashier and night security?

Some say grow your own food like ulam, carrots, lady’s finger, cabbage or long beans. Still, others suggest rear freshwater fish like catfish. And if you only have a room in an apartment, how do you do all this?

Lifestyle changes can be for likes of former PMs but they don’t need to with all the wealth they have! It is the poor who will suffer.

On the supply side, the Government has to find solutions to our net food import of RM55-60 billion a year. More land has to be made available, and not confiscate or revoke temporary land titles of vegetable farmers, as in Perak.

Meanwhile, the Government has set-up a special committee to wage “Jihad” on inflation. Jihad normally ends up killing the jihadists and/or the persons intended to be killed. It is better to set-up a hara-kiri committee on inflation, that may actually reduce the number of mouths to feed?

References:

It’s inflation crunch time, Be ready to fork out more to eat out, Ragananthini Vethasalam, Iylia Marsya Iskandar, Wani Muthiah and N. Trisha, The Star, 29 June 2022

Govt sets up committee to wage “jihad” on inflation, FMT Reporter, 29 June 2022

Malaysia: Wider Fiscal Deficit in 2022

 Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz recently said the projected consumption subsidies for this year will cover petrol, diesel, liquefied petroleum gas (RM37.3bil), cooking oil (RM4bil), flour and electricity to reduce the people’s cost of living, and subsidy bills (RM9.7bil), excluding welfare assistance from 2018 to 2022.

Added to other assistance such as social welfare assistance, including Bantuan Keluarga Malaysia (RM11.7bil) and other subsidies (RM14.6bil), he said the total subsidy so far is RM77.3bil for 2022.

On a separate note, FITCH Solutions Country Risk & Industry Research has revised upward Malaysia’s fiscal deficit forecast for 2022 to 6.5% of gross domestic product (GDP), from 6.3% previously.

While government debt had fallen slightly to 63% of GDP in 1Q 2022 from 63.4% of GDP in 4Q 2021, Fitch Solutions continues to expect the overall debt load to rise over the course of 2022, especially in light of the wider fiscal deficit that it now expects in 2022.

Public Debt Near Limit

Malaysia- Government Debt and Debt Limit, % of GDP

Fitch Solutions said it has revised upward its Malaysia’s revenue forecast to RM256 bil (15.2% of GDP) from RM234 bil (14% of GDP) previously mainly to account for the boost to revenue collection from higher average oil prices. Real GDP growth forecast is revised downward to 5.2% for 2022 from 5.6% previously.

On the same note, Fitch Solutions has also revised up its expenditure forecast for 2022 to RM364 bil (21.7% of GDP) from RM334 bil (21% of GDP) previously in order to reflect the Government’s additional spending on fuel and food subsidies amid rising prices in order to maintain the purchasing power of its citizens.

Subsidies are important to stem inflation. But this is a short-term measure. So, Government needs to plan a “weaning-off” period for stated subsidies in a recovery phase. Also, the Government has to be transparent on subsidies or grants to GLCs like MRT Corp, Prasarana, MAS and others. These are other leakages that need to be addressed, in order for deficits to be turned into surplus!

References:

Malaysia to see wider fiscal deficit in 2022 amid heavy subsidies, Cheah Chor Sooi, Focus Malaysia, 24 June 2022

Rising cost for stable prices, Eugene Mahalingam, The Star, 28 Jun 2022

A Few Good Men (and Women)?

Every day we hear tragic and distressing news of our moral decline. Corruption at the highest levels – a former PM, a party President, heads of GLCs or PLCs, bank CEOs or even a former Chief Secretary to the Government.

In the 60s and 70s, the hallmark of this nation (Malaysia) was its integrity. People were less conscious of religious practices and more tolerant of each other. With each passing decade, there is more religiosity but less moral fibre. Otherwise, we will not have 1MDB, FGV, National Feedlot, Caely, Sapura, Serba Dinamik and many others.

Source:https://www.integritysolutions.com

Then there are others who receive remuneration in the millions even though their companies (government or private) are going through distressing times. Workers are laid-off, branches closed, planes sold and write-offs made but they are well-off. Is that integrity? Is that right?

Next we have students who plagiarise assignments and essays. And this is in both public and private universities. Lecturers have to “tutup mata” and pass them. Exam questions are leaked for special groups. Exam markings have to be compromised because there is a KPI to meet or the Dean of school cannot have too many failures – bad for “marketing” to future, prospective students!

We have universities with courses on integrity, we have a National Integrity Institute, we have National Integrity Plan and we have integrity units in all major organisations including the Police! We even had a Minister for Integrity – who was formerly heading Transparency International – Malaysia. (He was vocal while in the private sector but became a “church mouse’ in the Government)

Is our system a facade of righteousness? With Jakim and others looking out for dress code, gaming activities, cinemas, bars and pubs as if corruption is permissible. In fact, one religious group views corruption as “rezeki”. Many of the religious “right’ make great speeches, provide talks or have townhouse meetings on integrity.

When there is no fear of God, we are white-washed tombs. No matter how many times you make your way to a holy site, you remain a sinner. Sins are not cleansed by pilgrimages but contriteness of heart and genuine turning away from wrongful acts or associations. God sees our hearts not our outward piousness. God is not a fool, He can see us through. It is us who fake outward appearances to “fool” ourselves, our friends or general public.

It takes a few good men (and women) to change this landscape of moral decay. We have to hope and pray that more will join an “Integrity Movement” to change society like Bersih in May 2018. May God have mercy on us!

“Are you not ashamed of your eagerness to possess as much wealth, reputation and honours as possible, while you do not care for nor give thought to wisdom and truth, or the best possible state of our soul?” 

-Socrates

Are Russian Foreign Reserves Frozen?

Despite Western sanctions, 35.5% of Russia's reserves has remained accessible in the country or in China, according to data compiled by Anadolu Agency. Western nations have frozen access to approximately half of the Russian central bank's reserves. The Russian central bank reserves stood at $643 billion as of Feb. 18. While 21.7% of the reserves are in Russia as gold, 13.8% are being held in China. Around 12.2% of Russia’s foreign exchange reserves are in France and 10% in Japan, while 9.5% are held in Germany and 6.6% in the US. 

Another 5% of the reserves are in various intergovernmental organizations and 4.5% in the UK. Austria holds 3% of the reserves, with 2.8% in Canada and the remaining 10.7% in undisclosed countries.

After Russia’s annexation of Crimea in 2014, Moscow stepped up measures to make less use of US dollars in order to protect itself from risks in economic and global trade. The share of US dollars in Russia's foreign exchange reserves fell to 16.4% in the first half of 2021, from 22.2% in the same period in the previous year, according to Russian central bank figures. Last July the Russian Finance Ministry announced that the share of US dollars in the country's national wealth fund had been reduced to zero.

The US and its allies agreed to remove certain Russian banks from the Society for Worldwide Interbank Financial Telecommunication, known as SWIFT, a global financial transactions and payments system used between banks worldwide. Russia’s central bank introduced the System for Transfer of Financial Messages, SPFS, an alternative financial transfer system against the possibility of getting excluded from the international SWIFT system. This is only popular within Russia.

What lessons can we learn?

Just as Russia, it is prudent to have Malaysia’s reserves in other currencies beyond the USD. It is also prudent to maintain such reserves in different financial markets. And, hopefully, we may not have problems like Russia. The era of the USD as the world’s reserve currency may end with emergence of other countries and currencies.

Reference:

Around 35% of Russia’s accessible reserves in country, China, Emre Gurkan Abay, 1 March 2022 (https://www.aa.com.tr )